01 Nov 2006
Product portfolio broadened; cash flow, revenues and profitability all set to increase.
StockerYale, a developer of photonics-based products, has acquired privately held Photonic Products(UK), a provider of laser diodes and modules for industrial, medical and scientific markets for $9.4 million in cash, stock and bonds.
Stocker Yale says the acquisition will broaden its product portfolio of laser modules, increase its 2006 revenues by approximately 50%, and should improve both profitability and cash flow. The acquisition is expected to accelerate overall growth and to be immediately accretive to earnings.
Photonic Products manufactures custom designed electro-optical sub-assemblies and optoelectronic components, based on semiconductor laser diode technology, for OEM manufacturers. It is also a distributor of industrial laser diodes, including blue-violet, red and infrared laser diodes from Sanyo, Sony and Opnext, and lenses from Panasonic.
For the year ending December 31, 2006, Photonic Products expects sales to hit $9.5 million and to achieve a record operating margin of 15%. This year, Photonic Products received the Queen?s Award for Enterprise: International Trade. Current management, led by Tony Pope, founder and managing director, and Damon Cookman, director of operations, will continue to manage the business.
Founded in 1995 and with 45 employees, Photonic Products? operation is located near Stansted with sales offices in Germany and California. Over the past five years, the company?s revenues have grown at a compound annual growth rate of 32%. Recently, the company invested in CNC manufacturing technology to boost capacity and productivity.
?Besides cot savings, we also expect to benefit from numerous cross-selling opportunities with each other?s customers and to access StockerYale?s distribution channels world-wide,? said Tony Pope, managing director.
StockerYale has paid $9.4 million for 100% of Photonic Products? outstanding stock. Consideration for the acquisition consisted of $2.75 million of newly issued StockerYale common shares; $4.25&bsp;million in cash; and a three-year bond, with an initial principal amount of $2.4 million and interest set at LIBOR plus 1%, payable to the sellers.
StockerYale also borrowed $4.75 million from The Eureka Interactive Fund Limited, in exchange for a five-year bond. The Eureka Interactive Fund Limited is managed by Marshall Wace LLP.
StockerYale expects the acquisition of Photonic Products to add approximately $11-12 million of revenue, and$1.5-2.9 million of EBITDA to the fiscal year ending December 31, 2007 and estimated pro-forma GAAP operating income of $0.9 - $1.3 million.